In this weekend's edition of Turning Points, the case was made for interest rates being offsides as, among other things, locked capital expecting a dire outcome to the Israel/Iran conflict has obscured the rate picture.
While certain sectors will benefit from rates coming down, there has been a tendency for risk assets to decline alongside rates in recent months as investors seem to have moved past inflation risk and are now focused on recession risk.
In other words, the threat of a soft landing turning into a hard landing is the primary concern.
With that said, those concerns have the potential to be magnified during the weeks ahead as earnings guidance will be erratic and economic data will turn from inflation focused with CPI/PPI out of the way, to economic activity.
A mixed picture, at best, emerges under even the best circumstances.
Rates decline, rate sensitive sectors benefit, most everything else suffers.
The market does the splits.
The rotation trade is alive and well.
Adjust accordingly.
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